Only the parent where the children physically live more than half the nights of the year has the automatic right to claim the children as dependents. Since 2019 had 365 days, more than half is 183 or more nights. The definition of dependent in this case does not include payment of support, only where the children live. There can be no such thing as 50/50 custody since it is based on the number of nights and there is an odd number of nights. The IRS does not follow state court orders.
If you are not the parent where the children lived more than half the nights of the year, then the only way you can claim them as dependents is if you get a signed dependent release form 8332 from the other parent and submit it along with your tax return. Form 8332 allows you to claim the children or child as a dependent and you will get the $2000 child tax credit if you are eligible, but form 8332 does not transfer the ability to file as head of household, or to claim the child and dependent care credit, or to claim EIC, because these benefits always stay with a parent who has custody more than half the nights of the year, but these benefits cannot be waived, transferred, or shared.
If you are not the parent with custody more than half the nights of the year, then you need to indicate in TurboTax that the children lived with you less than half the year (less than six months). The program will then ask if you have a signed form 8332. If you indicate no, then you can’t claim them as dependents. If you indicate that yes, you have a form 8332, then the program will claim the children for the tax credit but will not invalidate the other parent’s tax return if the other parent tries to claim them for head of household status or EIC.
If you are not the parent with custody more than half the nights of the year, you need to file an amended return and correct your dependent claim. You will be required to re-pay any excess refund. If the amended return is postmarked after July 15, you may also be billed for interest and late payment penalty. Your ex will be unable to e-file this year even if you file an amended return. Your ex should prepare a correct tax return that correctly claims the children as dependents if they lived with her more than half the year. She will have to print and mail her return.
If you don’t amend your return, and your ex files a return that also claims the children as dependents, then the IRS will send investigation letters to both parents and the parent who is not entitled to the dependent claim will be required to pay back any excess refund plus interest and penalties.
